contingent liability

Hi,

I think it is because the contingent liability is no longer contingent and has been recognised as a liability in the subsidiary’s books. It is therefore already included in the net assets at the reporting date and so no adjustment is necessary at the reporting date.

Thanks

It’s Open Tuition’s equivalent of R2-D2 from Star Wars……….

@hazratusman said:
hi dear sir hope you are fine
q 1 = At the time of the business combination with Margy, Joey has included in the fair value of Margy’s identifiable net assets, an unrecognised contingent liability of $6 million in respect of a warranty claim in progress against Margy. In March 20X4, there was a revision of the estimate of the liability to $5 million. The amount has met the criteria to be recognised as a provision in current liabilities in the financial statements of Margy and the revision of the estimate is deemed to be a measurement period adjustment.

q 2- On 31 July 2008, Grange acquired a 100% of the equity interests of Fence for a cash consideration of $214 million. The identifiable net assets of Fence had a provisional fair value of $202 million, including any contingent liabilities. At the time of the business combination, Fence had a contingent liability with a fair value
of $30 million. At 30 November 2009, the contingent liability met the recognition criteria of IAS 37 ‘Provisions, Contingent Liabilities and Contingent Assets’ and the revised estimate of this liability was $25 million. The accountant of Fence is yet to account for this revised liability.

whats the diffrence between these two adjustment thanks in advance

Hi,

Can you not post these questions on a thread that has already been created and start a new thread please. I believe that your first question already been answered and if you create a new thread I’ll answer the second one too.

Thanks